This new regime replaces the previous Non-Habitual Resident (“NHR”) tax regime, aiming to attract and retain highly skilled professionals in Portugal by offering attractive tax benefits.

While the regime was enacted on January 1st, 2024, the final regulations were only released on December 23rd, 2024, providing much-needed clarity for individuals and businesses.

The regime targets individuals with specific high-value skills and qualifications, such as researchers, scientists, and professionals in technology, innovation, and other high-growth sectors. Eligible individuals can benefit from a flat 20% income tax rate on employment income and professional income earned in Portugal. Furthermore, a near-total exemption applies to foreign-sourced income, including dividends, interest, capital gains, and rental income.

The tax benefits under this regime are generally available for a period of 10 consecutive years from the date of application.

Navigating the complexities of the regime requires careful planning and consideration. Meeting the specific criteria for high-skilled professionals and demonstrating the relevant qualifications and experience is paramount. Establishing and maintaining tax residency in Portugal while adhering to the specific requirements of the regime is crucial. Moreover, individuals must carefully consider the implications of departing from their current country of residence to relocate to Portugal, including potential tax implications in their home country.

Thus, one should seek advice from someone who understands the unique challenges faced by high-skilled professionals and can provide comprehensive support, not only in Portugal, but also in the country one is leaving, as well as in the country where their main assets and sources of income may be located.

Navigating the regime successfully requires a deep understanding of individual circumstances and careful planning. It is essential to ensure eligibility, develop a tailored tax strategy, and ensure compliance with all necessary filings. Seeking professional guidance from experienced tax advisors is crucial to achieve these objectives. By working closely with a tax advisor, individuals can maximize the benefits of the regime while minimizing potential risks and make informed decisions about their tax affairs.

by Mário Patrício, Tax Senior Manager at Forvis Mazars (mpatricio@mazars.pt)